Profits from the Poor

By Victor Callirgos

If your family lived in a 80 room mansion and the family next door
lived in a cardboard box, would you take money from them? Heres
the situation: 35 years ago your wealthy grandparents made a loan to
the neighbors, knowing they were of questionable character and might
just skip town, which they did. Their children were then held responsible
but couldnt pay; so your folks let them re-finance, but at twice
the interest rate, and on the condition that their entire household
budget be geared toward paying this loan. Now the grandchildren are
still trying to pay this loan off to you. But one of your neighbors
kids starved to death last year. Two others are too sick to attend
school but they cant afford a doctor, and the 12 year old works
full time with his mother (for less than minimum wage) at the sweatshop
that makes your kids designer clothes. The father complains
that he doesnt have cabfare to get to a decent job and that the
payments to you by now are almost all interest, which you, in your
80 room mansion, dont even need.

Still want the cash? Well
believe it or not, youre collecting it. You and I and everyone
else in the U.S., as well as many other industrialized nations and
multi-national corporations and organizations are making money at the
expense of the destitute Third World in what is known as the international
debt crisis.

The debt crisis, the 21st Centurys form of slavery,
refers to money owed by the poorest nations on earth to the richest.
This is more than a simple matter of paying back what was borrowed
when three tragic facts are taken into account. One is that large
portions of the loans were never put to use for the citizens of these
countries, but it is they who bear the burden of repayment. Another
is that the debtor nations are unable to educate or house their people,
cannot build an infrastructure or a stable economy, and are literally
starving to death in order to make their payments. The third, and
the most shocking, is that in many cases the original amounts borrowed
have actually been repaid, I was told, and that these poverty stricken
nations are now making interest payments to wealthy organizations and
nations who should beg the worlds forgiveness for profiting from
the unconscionable and avoidable misery of the poor.

During the
Cold War, rich countries made loans available to poor ones to create
strategic political alliances, or to find new lending markets, with
little attention paid to their use. Some went to line the pockets
of corrupt politicians or dictators, some for instant military build-ups.
In the worldwide recession of the late 1970s, the poor countries
had to borrow more money to cover their existing loans, but at sky
high rates. The World Bank and the International Monetary Fund (IMF)
offered to help with new loans, but these came on the condition of
strict revisions in their internal economic policies, which often included
cutbacks in wages and social services, making life even harder on the
poorest of the poor. When full payments could not be made, the unpaid
portion was added to the principal of the loan, creating a situation
in some countries where, after making years of payments, the balance
they owe is higher than it has ever been. There is no system of bankruptcy
for countries. Their only hope is for the creditor nations to cancel
their debt.

The World Bank and the IMF have identified 41 heavily
indebted poor countries (HIPC), whose debt burdens are unpayable.
The effect of the debt in these countries is so appalling it is hard
to believe it is allowed to continue. For example, in Tanzania 40%
of the population dies by age 35, but the government has spent as much
as 9 times more on foreign debt than on health care. In Nicaragua in
1997 (before the devastation of Hurricane Mitch) over 50% of all government
revenue was spent on foreign debt, more than twice the budgets for
health care and education combined (Oxfam International).

To
relate this to how we live, consider that the total owed to the U.S.
by the HIPCs is between $ 7 and $ 9 billion, a number that pales
in comparison to the $ 165 billion spent on the savings & loan bailout
(N.Y. Times 11/22/98). Incredibly, the cost of providing basic health
care and nutrition for all people in developing countries could be
achieved by spending an additional $ 13 billion annually, which is
$ 4 billion less than Americans and Europeans spend on pet food (U.N.
Development Program). Think about that from the perspective of a starving
human being.

With statistics as incomprehensible as these, there
is the danger of becoming numb to their reality and hopeless about
any possibility for change. But there is something we can do about
this structure of exploitation, greed and death. Last year I learned
of a campaign called Jubilee 2000, a worldwide movement seeking to
have the debts of the worlds poorest nations cancelled this year
(visit www.j2000usa.org or call 202-783-3566). Its broad base of support
includes secular and faith-based organizations; social justice, developmental
and environmental groups, and politicians from across the political
spectrum in the U.S.

Jubilee 2000 contends that we have a moral
obligation to end this financial tyranny with transparency and accountability
to insure that the citizens of those countries are the direct beneficiaries
of that relief. They are making people aware of the debts less
obvious consequences, such as the lowering of labor standards in order
to attract foreign investment, which opens the door to miniscule hourly
wages, sweatshop working conditions, forced overtime, and child labor
violations. Debtor nations may also weaken or ignore national and
international environmental regulations. First World corporations
have shown a willingness to overlook the human rights violations and
environmental degradation if they can make a buck. So, in the frenzy
for higher profit, an American factory closes, a sweatshop in the Third
World opens, and the downward cycle for the poor continues. The despair
born of crushing debt, along with the factional scrambling for the
few available resources, can also inflame social conflicts, contributing
to civil war and even the genocide recently practiced in Africa and
elsewhere.

The U.S. has cancelled debts before without disruption
to our economy. In fact, $7 billion owed by Egypt (about the same
as what is owed to the U.S. by all 41 HIPCS) was cancelled to
reward them for their support in the Gulf War. Recently, countries
such as Norway, Spain, and even Cuba have stepped forward to forgive
debts of the HIPCS, but U.S. progress is slow. After Hurricane
Mitch, our government allowed Honduras and Nicaragua to delay debt
payments for 2 years, but did not cancel them.

In 1999 congress
did appropriate $123 million for cancellation of debts owed directly
to the U.S., but thats only $6.5 million more than the Cincinnati
Reds appropriated for Ken Griffey, Jr. last winter. And, disappointingly,
even as the G-8 countries were on Okinawa last month again announcing
their intentions to relieve the suffering caused by the debt burden,
the U.S. House and Senate both underfunded debt cancellation in their
Foreign Operations Budgets. As inheritance taxes for the rich were
cut and the Congressional Budget Office estimated the budget surplus
for fiscal 2001 to be $102 billion, congress only funded 17% of the
U.S. debt relief pledge for this year, approximately $73 million.

While the industrialized world enjoys record prosperity, 120 million
children under age 14 work full time (People of Faith Network); and
with global food supplies at an all time high, 6 million children under
age 5 die annually in developing countries of hunger-related causes
(UNICEF). Thanks in large part to the debt crisis, the rich are getting
richer and the poor are getting poorer.

For me the classic film
Its A Wonderful Life parallels the dynamics of the
debt crisis. Wouldnt it suit the loathsome Mr. Potter to sit
in an opulent office counting money sent to him by the starving? How
many Third World men could be saved from a life of loneliness and alcoholism
if someone stuck by them in their time of crisis, like the egalitarian
George Bailey stuck by Mr. Gower, the druggist? How many women could
be saved from a life of prostitution if given the fresh start George
gave Violet Biggs? Potter peered out his window as Uncle Billy searched
in the snow for the missing $8.000 which Potter held on his lap. How
long will the poor of the world search for a way out of poverty while
we sit in our comfortable homes holding on to their answer?

Victor Callirgos lives in Bennington with his wife Daryl. He learned
about the issue of third-world debt while in Honduras after hurricane
Mitch with the disaster relief organization Church World Service.